Issue: №10/1, 2019
The article deals with theoretical foundations of the financial pyramids and their negative impact on the country’s economic development. The economic essence of the financial pyramids, and the main differences from the multi-level marketing are set, their main characteristics are determined. Typical examples of the most famous financial pyramids in Ukraine and in the world are presented and implications of their activity for the national economy as a whole are analyzed. The basic methods of detection of financial pyramids are considered: a forensic accounting expertise, an economic and forensic analysis, a forensic audit. The financial pyramid is an economic entity that doesn’t produce goods or provide services, but redistributes financial resources. At the same time, the owner of the financial pyramid usually attracts investors from very high interest rates. The only source of income for the financial pyramid is the income from the new creditors. The logical outcome of the financial pyramid is the bankruptcy of the enterprise. The main difference between the financial pyramid and multi-level marketing is the resource provision of income. The main reason for the spread of financial pyramids in Ukraine is the imperfection of the legislative framework. The most famous financial pyramids in Ukraine are: ‘Mercury – mutual fund’, ‘Elays’, ‘King’s capital’, MMM-2011 and FOREX MMCIS group; in the world: Madoff Investment Securities, ‘Enron’, Stanford Financial Group and MMM. The most common methods of identifying financial pyramids are a forensic accounting expertise, an economic and forensic accounting and a forensic audit. A forensic audit is the most effective method of identifying financial pyramids because it is based on a comprehensive investigation of all aspects of the business activity of the enterprise, namely: analysis of documentation, external and internal environment of the economic entity etc. To summarize, financial pyramids are a destructive factor in the development of the national economy in general, because they have a negative impact on all subjects of macroeconomics. References 1. Anikin A.V. History of financial turmoils. From John Law to Sergey Kiriyenko: Moscow: Olimp-biznes, 2000. 384 p. (in Russian) 2. Belitskiy V.Yu. Forensic characteristics of the identity of the perpetrator of the fraud on the basic of the «financial pyramid». Business in law. № 3. 2007. pp. 277-280. (in Russian) 3. Dimitriadi G.G. Models of financial pyramids: a deterministic approach: Moscow: Editorial URSS, 2002. 32 p. (in Russian) 4. Kindlberger Ch., Aliber R. World financial crises. Mania, panic and crashes: Saint Petersburg: Piter, 2010. 544 p. (in Russian) 5. Banakh S., Nemoskalov A. Financial pyramid fraud (Ukrainian realities). Actual problems of law. № 3 (7). 2016. pp. 74-77. (in Ukrainian) 6. Gusev A.A. The economic essence of the financial pyramids. Materials of the scientific and practical conference of young scientists «First Economic and Law studies». Odesa, 2019. pp. 39-41. (in Russian) 7. Shatkovska M.S. Forensic as a new service of audit companies in Ukraine. Collection of abstracts of students, graduate students and applicants – participants of the 75-th reporting conference of Odesa I.I. Mechnikov National University. Section of Economic and Law sciences. Odesa, 2019. pp. 146-148. (in Ukrainian)
Keywords : financial pyramids, national economy, multi-level marketing, forensic accounting expertise, economic and forensic analysis, forensic audit